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that end a tentative contract has been drafted and submitted to the Imperial irrigation district. It is apparent that construction and Operation under both of these contracts can not proceed independently. Mr. Holt, the representative of the district, repeatedly represented to the department that he is favorably disposed toward inclusion of the mesa lands, or a part thereof, in the irrigation district, and of making provision for the reclamation of such lands to be reclaimed through an all-American canal. It has become more and more apparent in the course of these negotiations that an all-American canal is an extensive and expensive proposition, in the construction of which all interests that may possibly be benefited thereby should cooperate and contribute, and the department is favorably disposed toward working out some feasible plan of accomplishing this object. The Reclamation Service is now, in cooperation with the Imperial irrigation district, making a survey with a view to determning the feasbility of an allAmerican canal. To require you to proceed at this time under alternative (a) might result in a useless duplication of work. Under the circumstances, therefore, it is deemed advisable at this time not to take action under either alternative (a) or (b), but rather to grant your request for more time by suspending further action at the present. This will give an opportunity to consider the results of the surveys and investigations now in progress and will afford your company and the people of the Imperial irrigation district an opportunity to consider further the advisability and ways and means of bringing in the mesa lands. Cordially, yours,

E. C. BRADLEY, Assistant to the Secretary.

Mr. Rose. I would like to ask Mr. Davis just one question there. Mr. HAYDEN. Let me ask him one first, if you please. Do you consider that the contract which was entered into by the Secretary of the Interior with the Imperial irrigation district, authorizing connection with the Laguna Dam, is in conflict with the contract of Mr. Rose? Mr. DAVIS. I think it is somewhat. It seems to me so. Mr. HAYDEN. Then the statement in this letter that it is apparent that construction and operation under both of these contracts can no independently is correct? r. DAVIs. Yes, sir; they ought not to, is the meaning of that— that is, there would be duplication and waste. Mr. HAYDEN. So that if the contract with the Imperial irrigation district is carried out it would certainly be necessary to modify the Rose contract to some extent, wherein there was conflict? Mr. DAvis. You mean the contract with the Imperial irrigation district 2 Mr. HAYDEN. To connect with the Laguna Dam, the existing cono: if it was carried out, the Rose contract could not be carried Out Mr. DAVIS. There are to some extent two contracts for the same thing, and they conflict. Mr. HAYDEN. Both providing for the all-American canal? Mr. DAVIs. Yes, sir. Mr. HAYDEN. In this connection, Mr. Chairman, I also desire to read into the record a letter by the Acting Secretary of the Interior, Mr. Vogelsang, under date of April 27, 1918, written shortly after the letter which I just read:

DEPARTMENT of THE INTERIOR, - Washington, April 27, 1918.

The REGISTER AND RECEIVER,
United States Land Office, El Centro, Calif.

GENTLEMEN: The attention of the department has been directed to the fact that inquiries have been made at your office as to whether persons who at pres

ent purchase stock in the Imperial Laguna Water Co. will be granted preference rights to file on public lands of the United States in the event the company's irrigation system is constructed.

July 6, 1917, the Secretary approved a form of contract providing for preliminary surveys and investigations for the project of the Imperial Laguna Water Co. and for the carrying forward of its plan if found feasible. Section 7 of the contract expressly provided that pending completion of all payments to be made to the United States under the contract or pending the prior termination of the contract the company should not dispose of any of its stock or rights to the use of water, except upon such terms and conditions as shall have been approved by the Secretary of the Interior.

Section 8 provided that sales of stock or rights to the use of water or contracts therefor by the company might be in amounts sufficient to furnish a water supply appurtenant to 160 acres of land and no more to any one person at a price not exceeding actual and necessary cost of the system. Section 9 provided that the first payments on account of the purchase of such stock or rights should be not less than $10 per acre of irrigable land, the entire amount of the first payment to be deposited in escrow in such national banks as the Secretary of the Interior may designate. Section 11 provided that in the event of the rejection of the plans, specifications, and estimates of the company, or in case the plans should fail, the Secretary of the Interior might direct the escrow-holding banks to repay the amounts deposited to the respective purchasers of stock or water rights, or their successors in interest.

None of these provisions and no other portion of the contract authorizes the staternent that persons buying water stock from this company would thereby secure a preference right to enter any particular tract of public land. No such statement was made, either in writing or verbally, by this department or any of its officers, so far as I am advised.

The contract, however, did contemplate that public lands of the United States within the areas susceptible of irrigation by the company's proposed works would be opened in such manner that entries would be made only by those who were able to secure water for the irrigation thereof. This might have resulted, had the company's plan been successful, in the acquisition of lands by persons holding stock in the company, but, as intimated, they would get no preference right to any particular tract of land, but would have to participate in a drawing or whatever other plan was adopted by the department for the opening of the lands.

The situation with respect to the said company at present is that the department has found the preliminary surveys and investigations to be too meager and unsatisfactory to warrant further favorable action, and that rejection of the plan pursuant to section 5 of the contract may be made at any time, action thereon having been merely suspended by the department because of the fact that there was some thought that a complete and comprehensive plan for the irrigation of the lands involved and of other lands in the Imperial Valley, including the existing Imperial irrigation district, might be provided for under an arrangement with the Imperial irrigation district and other parties in interest.

You are authorized to state specifically to any person making inquiry that the purchase of Imperial Laguna water stock will not entitle them to a preference right to enter any public land, and that up to the present time the company has made no such showing to the department as would indicate the feasibility of its scheme of irrigation. Very truly, yours,

ALEXANDER T. VOGELSANG,

Acting Secretary. I would like to ask, Mr. Rose how much stock has been sold in the Laguna Water Co.?

Mr. Rose. There has not been one single share sold. In 1914 and prior to that there were about 10,000 shares of stock sold.

Mr. HAYDEN. At how much a share?
Mr. Rose. It varied all the way from $5 to $15.

Mr. HAYDEN. Then how much money has been raised altogether by the sale of shares?

Mr. Rose. I should judge about $75,000 has been actually paid in on that stock.

Mr. HAYDEN. Where is that $75,000? Mr. Rose. It has been sunk in surveys and general work to carry this on—running a newspaper, for one thing very largely, and several other things, to bring about the all-American canal and the irrigation of these lands. Mr. HAYDEN. As I understand the situation, any stock sold prior to your contract in 1914? Mr. Rose. Yes. - Mr. HAYDEN. Can claim no rights under it, because the contract was not in existence. Mr. Rose. The department, the men who drafted that contract knew the existence of that stock, and they thoroughly understood it was outstanding and would be a part of the stock which the Imperial Laguna Water Co. would use as a mutual water company. That was explained to the department. I think that Mr. Davis will say that that was known. r. HAYDEN. If you sold stock in a mutual water company that you organized yourself in 1914 and made the sale at that time and you did not obtain the contract from the Secretary until 1917, any person who bought stock in 1914, or prior to July 6, 1917, can have no claim of equity under the contract, because it was not in existence at the time they bought the stock. Mr. Rose. They certainly can, because their money was spent to bring about the very thing that brought about the contract. Before we came here to contract we did run a preliminary survey, both through Mexico and here [indicating], and we brought that report to the department to show what the conditions really were, and we worked continuously to get that contract and bring it about. That land had lain idle since 1902, not only the public land, gentlemen, but thousands of acres of school land among it. Mo, HAYDEN. Have you sold any stock since the contract was made? Mr. Rose. Not one share; no, sir. Mr. HAYDEN. How many stockholders have you? Mr. Rose. I could not answer that exactly. There are several men in the valley like Mr. Forrester and other men, who have several sons, and who have ranches in the valley, who got behind this proposition. Mr. HAYDEN. There is a list on the books somewhere that shows who the stockholders are, isn't there? Mr. Rose. I could get the list. Mr. HAYDEN. Are there 20 or 30 or 40? Mr. Rose. I suppose on the books there are 50 or 60. Mr. HAYDEN. You think 50 or 60 people are interested in this matter? Mr. Rose. There are more than that, because a great many of those men have sons who have put up money. Mr. HAYDEN. Well, how many do you think? Mr. ROSE. About 100. Mr. HAYDEN. You think there are 100 people who have some interest in your company? Mr. Rose. Absolutely. About 15 of them are soldiers that bought stock before the war a long time.

Mr. HAYDEN. Can you furnish the committee with the names and addresses of those people ?

Mr. Rose. I could in a week or so, by writing out there.
Mr. HAYDEN. You have no such record here?
Mr. Rose. No.

Mr. HAYDEN. If it is agreeable to the committee, Mr. Chairman, I think we ought to know just who belongs to this company, where they live, and what interest they have in it.

Mr. SMITH of Idaho. Why would that be relevant to the consideration of this bill? We might just as well know who owns the land down in Mexico, the people that are trying to hold up this development.

Mr. HAYDEN. I would like very much to know that, too. I think a list of both of them would be very pertinent.

Mr. TAYLOR. I would like to get those fellows, too.

Mr. HAYDEN. The point I want to bring out by questioning Mr. Rose is this: That on his own statement the maximum number of people interested in his project are not more than 100, and that these 100 people are insisting that 50,000 or 60,000 people residing in the Imperial Valley shall conform to their wishes in the passage of this legislation.

Mr. Rose. We are not insisting on any such thing, Mr. Hayden; we are insisting on this, that the people who live inside of Imperial Valley have no interest in that outside land excepting as it helps them to build a canal for their own lands and their own use. There isn't a man here that ever represented Imperial Valley that owns or represents or ever did represent one acre of land outside of that valley, and the only interest that Imperial Valley has, gentlemen, is this: This report shows that Imperial Valley can build a canal for its own use, 6,000 second-feet capacity, for $26,000,000; or it can get the same canal by joining with the outside lands at $17,000,000, and that is really the only interest that Imperial Valley has in this matter. When you come right down to it, that is their interest, to save $9,000,000 for themselves.

Mr. HAYDEN. Of course, there is bound to be an advantage in cooperating and bringing all interests together.

Mr. RosE. Yet they are refusing to cooperate. They want a handpicked cooperation.

Mr. WELLING. Of course, Mr. Rose represents not only the Laguna Water Co. but also the Coachella Valley County water district among these 100 men that he refers to.

Mr. HAYDEN. No.

Mr. Rose. They are to this extent: That we made the first survey that ever showed those people what could be done. We brought them here; we went among them and made surveys and showed them what they could do. We also did the same thing with the east. side, which I represent here, which is entirely either lands that have been filed on or private lands. I represent them here; they were brought into this thing by the showing made by the Imperial Laguna Water Co. I think Mr. Yager will bear me out in that statement; and he is here.

Mr. WELLING. I would like to ask Gen. Davis a question here. It is a little apart from the trend the discussion has taken.

Section 13 of this bill, H. R. 11553, provides for storage. Now, I can understand, and I have understood all along, the danger that now confronts the Imperial Valley. I can understand the anxiety of my friend Kettner in pressing this legislation, and these gentlemen who represent the irrigation companies. I can understand the efforts of my friend Hayden here all through this measure in protecting the interests of the people that he represents; but I want to call attention to the fact that all the storage that goes—all the stored water that goes into the Imperial Valley, or into any other project on the lower waters of the Colorado River has to be stored in the States of Colorado and Utah. I want to know if there ought not to be inserted in this bill somewhere a provision that the people living adjacent to these storage areas in Utah and Colorado may have some opportunity to cooperate with the Reclamation Service in the use of the stored water before it goes down there to save the Imperial Valley and the Yuma project?

Mr. Smith of Idaho. While Mr. Welling is occupied, I wish I might ask a question. Mr. Hayden has stated that Mr. Rose is insisting on an amendment to the Kettner bill which will protect him and his associates, and I would like to ask Mr. Rose whether or not he will insist on the same sort of a provision in the bill I have introduced, should it be adopted ?

Mr. Rose. I would not. That bill leaves it absolutely open with the Secretary to allow us to go ahead and build the lateral systein, and we would not insist there.

Mr. HAYDEN. The reason why that could not be done under this bill, H. R. 11553, is that all of the East Mesa land, a part of which Mr. Rose desires to develop, is reserved for soldier settlement.

Mr. Smith of Idaho. There isn't any land reserved for soldier settlement there.

Mr. HAYDEN. Yes; all of the land south of the third standard parallel.

The CHAIRMAN. Just a moment there—I understand Mr. Davis directly to say that this committee would have nothing to do with the Rose contract—that is, Congress would not, not this committee.

Mr. Davis. Certainly I see no obligation. Of course, Congress could do anything it chose in regard to it.

The CHAIRMAN. Suppose we go right along here and this committee proceed regardless of that contract; where is it going to leave Mr. Rose ?

Mr. Davis. I haven't any doubt, though, that the Imperial irrigation district will make some settlement with Mr. Rose. They expect to treat him right, I think.

The CHAIRMAN. Then, if the committee should act and pass this bill, he would be left to the Imperial irrigation district as a moral proposition rather than a legal liability?

Mr. Davis. Yes, sir. Mr. HAYDEN. Now, let Mr. Davis answer Mr. Welling's question. Mr. Davis. As I understand it, Mr. Chairman, answering the question propounded by Mr. Welling, the gentleman from Utah suggests the insertion of some proviso enabling or requiring the secretary to make such arrangements as may be feasible for the use of a portion of the stored water in the vicinity in which the reservoir is constructed.

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